By Chuck DeVore
Texas taxpayers should prepare to guard their wallets ahead of what might be a turbulent legislative session in 2013. That’s because, if projections hold, the state will likely face a shortfall of $3 billion to $4.5 billion for this budget cycle and a gap of $10 billion to $13 billion for the next budget cycle. In other words: The state’s finances are out of whack, thanks in large part to last session’s budget gimmickry, exploding government health care costs, and $6 billion or so in recurring costs created by President Barack Obama’s 2009 stimulus program.
Texas taxpayers are doing their part—working harder, creating jobs and paying more in taxes. So the problem isn’t new revenue. Instead, while the taxpayers are too busy working to mess with Austin, an army of special interest groups and lobbyists are waiting to descend on the Capitol to push lawmakers to raise taxes and fees to preserve the status quo.
All of this makes what Gov. Rick Perry proposed last week in Houston that much more commendable.
The governor’s Texas Budget Compact sets out five responsible proposals aimed at getting a handle on the state’s current and future budget challenges.
Chief among the reforms was a call to balance the upcoming budget without any new taxes or tax increases. Though budget writers may find this difficult, it’s imperative that lawmakers avoid any proposals to raise taxes so the Lone Star State’s economic recovery isn’t put in jeopardy. Because the budget imbalance is fundamentally an issue of overspending rather than a revenue shortfall, the search for additional revenue from any source, such as expanding government-sanctioned gambling monopolies, should be resisted.
The governor’s second proposal urges lawmakers to eliminate unnecessary or duplicative government agencies and programs. (For folks wanting to know exactly what kind of agencies and programs that might entail, check out the Texas Public Policy Foundation’s “Real Texas Budget Solutions: 2013 and Beyond” for a list of 100-plus agencies and programs that should be either eliminated, consolidated, or greatly reduced.)
Next is a proposal that would bring more transparency to the budget process by enacting reforms to make it more difficult for lawmakers to use accounting tricks to balance the budget as happened last session.
The governor is also calling on lawmakers to strengthen the state’s constitutional spending limit. As Texas’ spending limit has been applied over the years, it has proven to have no real impact on the growth of state spending. Consider that since 1990, Texas’ budget has grown by 310 percent whereas the sum of population growth plus inflation has only increased by 132 percent. This kind of spending trajectory is unsustainable over the long term, and better taxpayer protections are greatly needed.
Finally, the governor called on lawmakers to preserve the state’s rainy day fund, officially known as the Economic Stabilization Fund, insisting that the bulk of funding in the state’s “savings account” be saved for future, unforeseeable emergencies such as hurricanes. But, if lawmakers drew the fund down, that they do so only for one-time expenses rather than recurring items.
The governor’s proposed budget and spending reforms are needed and would do right by Texas taxpayers.
The fact is, Texas’ success isn’t because of government. Rather, it’s because Texans have limited government more successfully than other states have, allowing free enterprise to flourish, which in turn has provided adequate tax funding for necessary government.
As a former state legislator, I’ve seen what happens when responsible budgeting is ignored—and it’s not pretty. Texas lawmakers once again have the opportunity to rise to the challenge and provide an example of fiscal discipline that the rest of America would be wise to follow.
this article appeared on the Texas Public Policy Foundation on 5/1/12